The loan to value ratios (LTVs) available in commercial loans may be influenced by the type of program. LTVs have to do with the percentage amount you are able to borrow against the collateral used to secure the loan. For example, if you are looking at purchasing a retail shopping center valued at $7 million, and are able to secure an 80 percent LTV, you need to have at least a $1.4 million down payment out of your own pocket. It should be noted that the appraised value and sales price might vary, and, sometimes, you are able to purchase property for less than the appraised value. In these situations, your down payment amount would be reduced.
Non-recourse loan programs from Commercial Lending Corporation could have smaller LTVs than recourse loan programs. A non-recourse loan is a secured loan where you provide the lender with interest in a piece of collateral, such as property. In the event you default on the loan, the lender has the right to seize the property and sell it to satisfy the outstanding loan balance. However, the lender is limited in their recovery efforts and may only use the sale of the property to satisfy the debt. For this reason, lenders often limit the LTVs to smaller amounts to ensure the property can be sold and can fully pay off the defaulted debt.
With a recourse loan program from Commercial Lending Corporation, LTVs can be higher, because the lender has more options for recovery in the event of a default. In addition to being able to seize and sell the collateral, the lender might also utilize methods for securing other assets owned by the business. Further, the lender could even attempt to collect any remaining amount still owed on the loan from personal accounts held by the business owners.
Tagged: Commercial Lending Corporation